Sustainable development via environmental taxes and efficiency in energy: Evaluating trade adjusted carbon emissions

Sustainable development goals are one of the key targets to achieve for many countries across the globe. The current study aims to determine the impact of economic development and global commerce, specifically by considering trade separately, energy efficiency, and environmental levies on consumption-based carbon emissions (CCO2) for the G-7 countries between 1990 and 2020. This research used slope-heterogeneity and cross-section dependency to determine the unit root order. To assess the long run and short-run correlations between variables, the cross-sectionally augmented autoregressive distributed lags model (CS-ARDL) is employed, along with an augmented mean group test to ensure robustness. The study found that economic growth and imports are deteriorating, impacting the CCO2 emission of the G-7 countries, while the exports, energy efficiency and environmental taxes are having a corrective impact on the CCO2 emission. As per the results, focusing on energy efficiency will have a more correcting impact on CCO2 than on the other factors. The augmented mean group model further validates the results.